Strategy and Tactics of Distributive Bargaining

Session 1

Luis F. Gómez L.

Distance Learning Faculty

28 August, 2025

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The purpose of the virtual meetings is to answer questions and not to make a summary of the study material.
This presentation is based on (Lewicki et al., 2024, Chapter 2)

Purpose
- Understand the basic elements of a distributive negotiation situation, as well as the strategies and tactics that can be applied in this context.

Buyer: Jackson ($J$) and Seller: Sofia ($S$)¹
- Resistance point $J$, $Rp_J$: 150K USD
- Resistance point $S$, $Rp_S$: 130K USD

Buyer: Jackson ($J$) and Seller: Sofia ($S$)
- Initial offer $J$, $Io_J$: 133K USD
- Initial offer $S$, $Io_S$: 145K USD

Figure 2: Initial offers

Buyer: Jackson ($J$) and Seller: Sofia ($S$)
- Target point $J$, $Tp_J$: 135K USD
- Target point $S$, $Tp_S$: 140K USD

Figure 3: Target points

Buyer: Jackson ($J$) and Seller: Sofia ($S$)
- BATNA $J$, $BATNA_J$: 142K USD
- BATNA $S$, $BATNA_S$: 134K USD

Figure 4: Best alternatives to a negotiated agreement

Buyer: Jackson ($J$) and Seller: Sofia ($S$)
- Bargaining range²: $[\text{\$130K},\text{\$150K}]$
  - Is the result of $[\text{\$130K}, \infty) \cap [0, \text{\$150K}]$
  - If the bargaining range is $\neq \emptyset$, $Rp_S \leq BATNA_J$ and $BATNA_S \leq Rp_J$ then an aggrement between $J$ and $S$ is possible

Buyer: Jackson ($J$) and Seller: Sofia ($S$)
- In this example the settlement point $\in [Tp_J, Tp_S] = [\text{\$135K}, \text{\$140K}]$

Figure 6: Possible values for a settlement point

In the case of a distributive negotiation, it is most likely that the settlement point does not correspond to the target points of the participants in the negotiation.
In the example of $J$ and $S$ it was implicitly assumed that the negotiation element was the price. This element is known as a bargaining mix³ where it does not necessarily have to be a single element.
- For example $J$ and $S$ also can include in the bargaining mix the final date of the sale, whether or not renovations are included or if other items such as furniture and household appliances are added.

Figure 7: Strategies distributive bargaining (Lewicki et al., 2024, pp. 39–41)

Figure 8: Tactics distributive bargaining (Lewicki et al., 2024, pp. 42–48)⁴

Figure 9: Tactics distributive bargaining (Lewicki et al., 2024, pp. 42–48)

Commitment means taking a stance in a negotiation and making a explicit or implicit promise about future actions.
- A commitment is a way to create a bargaining position by specifying a future action if a position is not reached.
- A commitment aims to clarify the negotiator’s planned actions and eliminate any uncertainty about their intentions.
  - However, they may also fix a negotiator to a particular position (Lewicki et al., 2024, Chapter 2, p. 56)
  - That is why when making commitments, one should also make contingency plans for a graceful exit if needed
  - Also it is important to point out that good, sound and deliberate commitments take time to establish so it is important to don’t commit prematurely (Lewicki et al., 2024, Chapter 2, p. 56)

Figure 10: Ways to abandon a committed position (Lewicki et al., 2024, pp. 58–59)

Sometimes in negotiations people use hardball tactics. In general in (Lewicki et al., 2024, Chapter 2, p 61) the authors recommend not to use them as they cause damage in the negotiation process. However, it is important to know them and know how to deal with them.
In (Lewicki et al., 2024, Chapter 2, pp. 61-62) 4 possible strategies to face these tactics are pointed out:
- Discuss them
- Ignore them
- Respond in kind
- Co-opt the other party

Figure 11: Typical hardball tactics (Lewicki et al., 2024, p. 63)

To my family that supports me
To the taxpayers of Colombia and the UMNG students who pay my salary
To the Business Science and R4DS Online Learning communities where I learn R and $\pi$-thon
To the R Core Team, the creators of RStudio IDE, Positron, Quarto and the authors and maintainers of the packages tidyverse, ggrepel, latex2exp, scales and tinytex for allowing me to access these tools without paying for a license

Lewicki, R. J., Barry, B., & Saunders, D. M. (2024). Negociación (9th ed.). McGraw-Hill Education. https://www-ebooks7-24-com.ezproxy.umng.edu.co/?il=40562

Muthoo, A. (1999). Bargaining theory with applications. Cambridge University Press.

Both $J$ and $S$ have a common interest in cooperating but conflicting interests on how exactly to cooperate. For that reason a negotiation situation arises (Muthoo, 1999)
Also known as settlement range or zone of potential agreement
It is define as the set of issues that will be negotiated
In negotiation contexts as it is pointed out in (Lewicki et al., 2024), screening activities are tactics used to avoid disclosing sensitive information.
Remember that negotiation as a form of decision making is not the only method that exists!